7 ms·

Producing it is not the hard part. Researching it is... And you are not paid for your research "up front". It's added to the cost afterwards.

by karles 2y ago

smitty1e 2y ago
#DingDingDing In general, mono-dimensional arguments merit an extra dose of skepticism from the audience.
lxgr 2y ago
On top of research, FDA approval doesn’t come for free either.
- lxgr 2y ago
  Are the downvotes expression of disapproval with the FDA process or disagreement with the assertion that it's become slow and expensive enough to pose an ethical problem (e.g. for people with diseases for which a cure exists but is still waiting for approval)? Or does anybody actually believe FDA approval is very easy and cheap to come by these days?
RantyDave 2y ago
I'm not Pharma industry expert but ... I'm pretty sure it's much the same as venture capital. That is to say that's it's not that expensive to R&D it, certainly compared to the eventual sale price, but it's carrying the cost of the hundred potential drugs that never made it to market that's the killer.
- max_ 2y ago
  It takes $300m to $2B to get a drug approved. And the approval rate is less than 12%. The crazy pricing is to compensate for the failed projects. Also, it's not like you can bootstrap yourself or grow organically like Startups. You have to wait for like 10 - 15 years. To actually start selling it. [1]: https://www.google.com/amp/s/www.policymed.com/amp/2014/12/a-tough-road-cost-to-develop-one-new-drug-is-26-billion-approval-rate-for-drugs-entering-clinical-de.html https://www.google.com/amp/s/www.policymed.com/amp/2014/12/a...
  - lostlogin 2y ago
    > Also, it's not like you can bootstrap yourself or grow organically like Startups. So if they have a effectively built monopoly, chopping down the maximum they can charge via regulation would seem sensible wouldn’t it?
    - bryanrasmussen 2y ago
      there is also a lot of problems with pharma not wanting to invest in cures for smaller diseases because the payback seems unlikely to happen or not be great enough to warrant the risk, so this seems like a pretty good vote getting maneuver that might have unintended consequences.
    - Scandiravian 2y ago
      I think that's difficult to implement. There's a risk that companies might end up not launching new products on the US market There's several factors that impact US drug prices. For instance FDA approvals are significantly more costly than EMA ones and the bargaining power of healthcare providers is worse compared to a single payer system I have no knowledge of US laws, but I wouldn't be surprised if there's some kind of law preventing government interference with "the free market"
      - joatmon-snoo 2y ago
        No such law here in the states, just a political atmosphere where some people adore the idea of socialism and others see it as the coming of the end of times. Combine that with a highly complex industry structure that’s been entrenched for decades, and you end up in a situation where it’s near impossible to pass laws that actually structurally change our system. (It’s almost the opposite, in fact, where our courts have expanded the Commerce Clause over time to allow the federal government the ability to regulate close to any economic activity.)
        Scandiravian 2y ago
        Thanks for the clarification! :)
- ethanbond 2y ago
  No it’s also ludicrously expensive to R&D a drug, even if you just count the costs of the successful program. You’d be looking at easily $50-$150MM just in clinical trial costs, not to mention the years or decades of preclinical work. Factor in the failed programs and you’re looking at about $2B of spend in order to bring a drug to market.
  - Scandiravian 2y ago
    If I remember correctly that cost is also only the price of developing a successful drug Several drug developments are halted before they reach market. Novo for instance lost a lot of money on their bet to develop inhalable insulin 15 years ago That cost also has to be recouped when finally hitting the jackpot
  - FireBeyond 2y ago
    Of the top 10 pharma companies, 5 are American, and three of them rank 8th, 9th and 10th for R&D investment. So the whole "American big pharma needs to make a billion dollars a week in profit to recoup their R&D" is nothing but marketing fluff.
    - tacticalturtle 2y ago
      Does it matter that only some of them are headquartered in the US? Presumably those other companies also sell drugs in the US? I would think any company - regardless of where it’s headquartered - would seek to recoup R&D costs in a huge market like the US where prices aren’t capped by the government.
    - ethanbond 2y ago
      I… am not following this. Novo Nordisk for example is a Danish company. I haven’t seen anyone say American pharma companies in particular need to make a ton of money. The American-specific topic is that American consumers pay a ton more for drugs. That can be chalked up to lack of single-payer making American consumers incredibly easy to bully/negotiate against + all the rent-seekers who sit at various points along the care delivery system.
- joatmon-snoo 2y ago
  It’s even riskier than VC, because the capital requirements in pharma per venture are _significantly_ higher.
ecocentrik 2y ago
There's not a single drug company on the market that stops charging a high price for a drug as soon its covered its research expenditure.
- rapatel0 2y ago
  you also need to cover the cost of the 100 drugs that failed at various stages of the pipeline. Not saying that it's not a screwed up industry, but stories like these distort the problem as well
  - kittiepryde 2y ago
    Are the people running drug companies barely scraping by?
    - ecocentrik 2y ago
      Not nearly as much as they claim they are. The system is basically rigged in their favor. Just compare the financial statements of companies like Ford and Boeing to Eli Lilly and Novo Nordisk. Pharma does very good business.
    - rapatel0 2y ago
      Obviously not, but my general experience with conversations like these is that people never do the math. If we split the profits across all of the people that "deserve reimbursement" you usually end up with a few dollars per person. Definitely, not enough to make a meaningful impact. Additionally, the American consumer subsidizes R&D and costs for the rest of the world. America routinely pays 5x-20x more for drugs than other countries and American grants account for >50% of worldwide medical research funding (caveat: the last time I checked). Yup, even Europe is a fraction of what America pays. I would encourage you to actually do the math and decide for yourself rather than taking (or anyone else's) word for it.
  - GoodJokes 2y ago
    [dead]
lostlogin 2y ago
There is an awful lot of sympathy for the drug company in this thread. You are correct, research and approval is expensive. But at some point there is a limit. Things like insulin are long paid off, and the pricing there has generated controversy. People have been charged $1000 a month for it [1]. What’s fair? They are screaming out to be regulated when they behave so badly, and that’s what’s happened with insulin. [1] https://www.thelancet.com/journals/landia/article/PIIS2213-8587(22)00251-0/fulltext https://www.thelancet.com/journals/landia/article/PIIS2213-8...
- pstrateman 2y ago
  Insulin isn't a single product. If you're not distinguishing between insulin extracted from a horse circa 1922 and a modern synthetic analog, well that's just not being honest. There's good arguments that the modern synthetic analogs are overpriced, but that's a more subtle argument.
  - lostlogin 2y ago
    The situation described in that Lancet article doesn’t seem very subtle. And if the US is able to impose maximum pricing that is so much lower, it would seem likely that price gouging was occurring.
    - pstrateman 2y ago
      The lancet 'article' doesn't actually say anything. It's just a political hack job.
  - zachmu 2y ago
    When people complain about being forced to pay thousands a month for insulin, they're talking about the newest synthetic insulins that were developed very recently at substantial costs. They could take the older insulins for $50 a month, no one is stopping them. It's just that those older products are less convenient.
    - 2y ago
amelius 2y ago
Society contributed to that research in the form of education, academia, infrastructure, ...
- Cupprum 2y ago
  And Novo Nordisk contributed back to society. By a lot. Large part of earnings goes to Novo Foundation, which is used to help people in Denmark and make it to a nicer country for people (even though its already amazing country).
- thereisnospork 2y ago
  And for that investment society now has a new drug anyone can make at cost from t+20 year till forever. I'm not seeing how society is getting screwed here in the big picture.
clumsysmurf 2y ago
There was a recent story right here on HN that contradicts that narrative. "Big Pharma spends billions more on executives and stockholders than on R&D" https://news.ycombinator.com/item?id=39405547 https://news.ycombinator.com/item?id=39405547
consumer451 2y ago
According to Acquired.fm, they are required to sell their products at cost in Denmark, and allowed to make up for that around the world. I am curious for feedback here on the accuracy of this information. I can't believe that I'm sharing YouTube shorts on HN, but this is the best way to share this info at the moment: https://www.youtube.com/shorts/IVut-PE6LCA https://www.youtube.com/shorts/IVut-PE6LCA https://www.youtube.com/watch?v=lsCvQSNsaVk https://www.youtube.com/watch?v=lsCvQSNsaVk
yread 2y ago
Pharma stocks actually underperform compare to other companies. So, it's not like pharma companies are making insane profits. Research, regulation, approvals and failures are expensive
- FireBeyond 2y ago
  > So, it's not like pharma companies are making insane profits. Huh. > Gilead Sciences gross profit for the twelve months ending December 31, 2023 was $20.618B Not insane profits, indeed.
  - yread 2y ago
    That's GROSS profit. That's basically saying that the same as the article, they have insane margins, selling 5$ pills for 1000$. They have to pay for the other stuff. Net income was 5.6B. Still, a lot but yeah it's a big company. GILD is down 10%+ YoY. SP500 is up 28% YoY. Or Cigna (health insurance, also 100B market cap) 43% up
datavirtue 2y ago
Marketing spend dwarfs (dwarves?) R&D costs by multiple factors.
- pfdietz 2y ago
  I believe that claim ignores the R&D that is occurring in small companies. The large companies are good at marketing, so they buy small companies that have a hit, and then market it. The large purchase price they pay for the small companies reflects all that R&D that was done by the small companies (including the ones that didn't get a hit and weren't purchased.)
TaylorAlexander 2y ago
I agree, someone has to pay for the research. Stories like this seem to pretty clearly represent the hazards of private funding for drug research. Publicly funded research and possibly publicly funded drug production could eliminate this issue.

Producing it is not the hard part. Researching it is... And you are not paid for your research "up front". It's added to the cost afterwards.

by karles 2y ago

Producing it is not the hard part. Researching it is... And you are not paid for your research "up front". It's added to the cost afterwards.

smitty1e 2y ago

#DingDingDing In general, mono-dimensional arguments merit an extra dose of skepticism from the audience.

lxgr 2y ago

On top of research, FDA approval doesn’t come for free either.

lxgr 2y ago
Are the downvotes expression of disapproval with the FDA process or disagreement with the assertion that it's become slow and expensive enough to pose an ethical problem (e.g. for people with diseases for which a cure exists but is still waiting for approval)? Or does anybody actually believe FDA approval is very easy and cheap to come by these days?

RantyDave 2y ago

I'm not Pharma industry expert but ... I'm pretty sure it's much the same as venture capital. That is to say that's it's not that expensive to R&D it, certainly compared to the eventual sale price, but it's carrying the cost of the hundred potential drugs that never made it to market that's the killer.

max_ 2y ago
It takes $300m to $2B to get a drug approved. And the approval rate is less than 12%. The crazy pricing is to compensate for the failed projects. Also, it's not like you can bootstrap yourself or grow organically like Startups. You have to wait for like 10 - 15 years. To actually start selling it. [1]: https://www.google.com/amp/s/www.policymed.com/amp/2014/12/a-tough-road-cost-to-develop-one-new-drug-is-26-billion-approval-rate-for-drugs-entering-clinical-de.html https://www.google.com/amp/s/www.policymed.com/amp/2014/12/a...
- lostlogin 2y ago
  > Also, it's not like you can bootstrap yourself or grow organically like Startups. So if they have a effectively built monopoly, chopping down the maximum they can charge via regulation would seem sensible wouldn’t it?
  - bryanrasmussen 2y ago
    there is also a lot of problems with pharma not wanting to invest in cures for smaller diseases because the payback seems unlikely to happen or not be great enough to warrant the risk, so this seems like a pretty good vote getting maneuver that might have unintended consequences.
  - Scandiravian 2y ago
    I think that's difficult to implement. There's a risk that companies might end up not launching new products on the US market There's several factors that impact US drug prices. For instance FDA approvals are significantly more costly than EMA ones and the bargaining power of healthcare providers is worse compared to a single payer system I have no knowledge of US laws, but I wouldn't be surprised if there's some kind of law preventing government interference with "the free market"
    - joatmon-snoo 2y ago
      No such law here in the states, just a political atmosphere where some people adore the idea of socialism and others see it as the coming of the end of times. Combine that with a highly complex industry structure that’s been entrenched for decades, and you end up in a situation where it’s near impossible to pass laws that actually structurally change our system. (It’s almost the opposite, in fact, where our courts have expanded the Commerce Clause over time to allow the federal government the ability to regulate close to any economic activity.)
      - Scandiravian 2y ago
        Thanks for the clarification! :)
ethanbond 2y ago
No it’s also ludicrously expensive to R&D a drug, even if you just count the costs of the successful program. You’d be looking at easily $50-$150MM just in clinical trial costs, not to mention the years or decades of preclinical work. Factor in the failed programs and you’re looking at about $2B of spend in order to bring a drug to market.
- Scandiravian 2y ago
  If I remember correctly that cost is also only the price of developing a successful drug Several drug developments are halted before they reach market. Novo for instance lost a lot of money on their bet to develop inhalable insulin 15 years ago That cost also has to be recouped when finally hitting the jackpot
- FireBeyond 2y ago
  Of the top 10 pharma companies, 5 are American, and three of them rank 8th, 9th and 10th for R&D investment. So the whole "American big pharma needs to make a billion dollars a week in profit to recoup their R&D" is nothing but marketing fluff.
  - tacticalturtle 2y ago
    Does it matter that only some of them are headquartered in the US? Presumably those other companies also sell drugs in the US? I would think any company - regardless of where it’s headquartered - would seek to recoup R&D costs in a huge market like the US where prices aren’t capped by the government.
  - ethanbond 2y ago
    I… am not following this. Novo Nordisk for example is a Danish company. I haven’t seen anyone say American pharma companies in particular need to make a ton of money. The American-specific topic is that American consumers pay a ton more for drugs. That can be chalked up to lack of single-payer making American consumers incredibly easy to bully/negotiate against + all the rent-seekers who sit at various points along the care delivery system.
joatmon-snoo 2y ago
It’s even riskier than VC, because the capital requirements in pharma per venture are _significantly_ higher.

ecocentrik 2y ago

There's not a single drug company on the market that stops charging a high price for a drug as soon its covered its research expenditure.

rapatel0 2y ago
you also need to cover the cost of the 100 drugs that failed at various stages of the pipeline. Not saying that it's not a screwed up industry, but stories like these distort the problem as well
- kittiepryde 2y ago
  Are the people running drug companies barely scraping by?
  - ecocentrik 2y ago
    Not nearly as much as they claim they are. The system is basically rigged in their favor. Just compare the financial statements of companies like Ford and Boeing to Eli Lilly and Novo Nordisk. Pharma does very good business.
  - rapatel0 2y ago
    Obviously not, but my general experience with conversations like these is that people never do the math. If we split the profits across all of the people that "deserve reimbursement" you usually end up with a few dollars per person. Definitely, not enough to make a meaningful impact. Additionally, the American consumer subsidizes R&D and costs for the rest of the world. America routinely pays 5x-20x more for drugs than other countries and American grants account for >50% of worldwide medical research funding (caveat: the last time I checked). Yup, even Europe is a fraction of what America pays. I would encourage you to actually do the math and decide for yourself rather than taking (or anyone else's) word for it.
- GoodJokes 2y ago
  [dead]

lostlogin 2y ago

There is an awful lot of sympathy for the drug company in this thread. You are correct, research and approval is expensive. But at some point there is a limit. Things like insulin are long paid off, and the pricing there has generated controversy. People have been charged $1000 a month for it [1]. What’s fair? They are screaming out to be regulated when they behave so badly, and that’s what’s happened with insulin. [1] https://www.thelancet.com/journals/landia/article/PIIS2213-8587(22)00251-0/fulltext https://www.thelancet.com/journals/landia/article/PIIS2213-8...

pstrateman 2y ago
Insulin isn't a single product. If you're not distinguishing between insulin extracted from a horse circa 1922 and a modern synthetic analog, well that's just not being honest. There's good arguments that the modern synthetic analogs are overpriced, but that's a more subtle argument.
- lostlogin 2y ago
  The situation described in that Lancet article doesn’t seem very subtle. And if the US is able to impose maximum pricing that is so much lower, it would seem likely that price gouging was occurring.
  - pstrateman 2y ago
    The lancet 'article' doesn't actually say anything. It's just a political hack job.
- zachmu 2y ago
  When people complain about being forced to pay thousands a month for insulin, they're talking about the newest synthetic insulins that were developed very recently at substantial costs. They could take the older insulins for $50 a month, no one is stopping them. It's just that those older products are less convenient.
  - 2y ago

amelius 2y ago

Society contributed to that research in the form of education, academia, infrastructure, ...

Cupprum 2y ago
And Novo Nordisk contributed back to society. By a lot. Large part of earnings goes to Novo Foundation, which is used to help people in Denmark and make it to a nicer country for people (even though its already amazing country).
thereisnospork 2y ago
And for that investment society now has a new drug anyone can make at cost from t+20 year till forever. I'm not seeing how society is getting screwed here in the big picture.

clumsysmurf 2y ago

There was a recent story right here on HN that contradicts that narrative. "Big Pharma spends billions more on executives and stockholders than on R&D" https://news.ycombinator.com/item?id=39405547 https://news.ycombinator.com/item?id=39405547

consumer451 2y ago

According to Acquired.fm, they are required to sell their products at cost in Denmark, and allowed to make up for that around the world. I am curious for feedback here on the accuracy of this information. I can't believe that I'm sharing YouTube shorts on HN, but this is the best way to share this info at the moment: https://www.youtube.com/shorts/IVut-PE6LCA https://www.youtube.com/shorts/IVut-PE6LCA https://www.youtube.com/watch?v=lsCvQSNsaVk https://www.youtube.com/watch?v=lsCvQSNsaVk

yread 2y ago

Pharma stocks actually underperform compare to other companies. So, it's not like pharma companies are making insane profits. Research, regulation, approvals and failures are expensive

FireBeyond 2y ago
> So, it's not like pharma companies are making insane profits. Huh. > Gilead Sciences gross profit for the twelve months ending December 31, 2023 was $20.618B Not insane profits, indeed.
- yread 2y ago
  That's GROSS profit. That's basically saying that the same as the article, they have insane margins, selling 5$ pills for 1000$. They have to pay for the other stuff. Net income was 5.6B. Still, a lot but yeah it's a big company. GILD is down 10%+ YoY. SP500 is up 28% YoY. Or Cigna (health insurance, also 100B market cap) 43% up

datavirtue 2y ago

Marketing spend dwarfs (dwarves?) R&D costs by multiple factors.

pfdietz 2y ago
I believe that claim ignores the R&D that is occurring in small companies. The large companies are good at marketing, so they buy small companies that have a hit, and then market it. The large purchase price they pay for the small companies reflects all that R&D that was done by the small companies (including the ones that didn't get a hit and weren't purchased.)

TaylorAlexander 2y ago

I agree, someone has to pay for the research. Stories like this seem to pretty clearly represent the hazards of private funding for drug research. Publicly funded research and possibly publicly funded drug production could eliminate this issue.